ZaZa Energy, EOG to work the Eaglebine

ZaZa Energy Corp. has entered into a joint venture with EOG Resources to develop ZaZa’s Eaglebine assets in five counties north of Houston.

EOG will be the operator of the project.

ZaZa did not name its partner in its announcement, but EOG was identified in a filing with the Securities and Exchange Commission and in an analysts’ note released by Wells Fargo Securities.

ZaZa has been heavily invested in the Eagle Ford and Eaglebine; it sold its assets in the Paris Basin to Vermilion Energy for $85.5 million last fall.

EOG, which is based in Houston, is the largest operator in the Eagle Ford and has acknowledged testing in the Eaglebine but has been reluctant to talk publicly about its activities in the region.

Houston-based ZaZa Energy, in contrast, has spoken openly about its hopes for the play.

“We have very big hopes for the Eaglebine,” CEO Todd Brooks said in November, as the company announced plans for its first well there. “This is the kind of thing you can build a company around.”

According to the Wells Fargo note, other companies involved in the Eaglebine include Halcon and Encana.

ZaZa owns some properties in the Eaglebine under a joint venture with Range Texas Production, a subsidiary of Range Resources.

Under the terms of the agreement, EOG will receive up to a 75 percent working interest in the venture. ZaZa will retain a 25 percent working interest. On properties ZaZa shares with Range, EOG will receive a 50 percent working interest, while ZaZa and Range will each retain a 25 percent working interest, according to the SEC filing.

In exchange, EOG will pay ZaZa $10 million and will assume drilling and completion costs for three wells.

EOG will have an option to go forward with developing the assets after that.

The acreage is in Walker, Grimes, Madison, Trinity and Montgomery counties.

According to ZaZa’s announcement, early-stage drilling preparations have already begun.

ZaZa also announced Monday that it has entered into an agreement to sell about 10,000 acres in the Eagle Ford Shale for $52.5 million.

The properties in Fayette, Gonzales and Lavaca will be sold in two separate transactions and are expected to close in the second quarter of 2013, the company said.